My high point for May has been becoming chair of the board of CFSI -- the Center for Financial Services Innovation.
CFSI’s founder and chief executive is Jennifer Tescher. She’s now my good friend, but I vividly remember the first time I saw her. We were at a small roundtable in California, an event where I was a veteran and she was a first-timer. I initially assumed that CFSI was a consumer advocacy group, but as Jennifer began to talk, I realized it was a new kind of mission-driven non-profit. She said things I’d never heard before from an advocate -- or anyone at all -- in all my years of working with consumer inclusion and protection. She spoke about using technology to solve consumers’ financial problems. She defined those problems in terms that transcended lack of income or lack of banking services. She even described making venture investments in startups that were building new financial products.
Through my whole career, policymakers have worked from an implicit assumption that financial inclusion is a regulatory issue, needing solutions like the Community Reinvestment Act. Suddenly, someone had new ideas. And these ideas were built on entrepreneurial energy and technology. In a word, on innovation.
CFSI is unique in how it blends research, convening power, thought leadership, and fostering of cutting-edge innovation. It has a membership network. It runs the Finlab, a fintech accelerator funded by JPMorgan Chase that is already producing successful companies. It conducts research, including the landmark US Financial Diaries study, which has just become a book. It spun off the impact venture fund Core Innovation Capital. It invented and runs FinX, which will come to any group and help participants experience, on the ground, how marginalized consumers navigate the financial system.
The Diaries and other research are reframing how we think about financial inclusion by identifying a crucial dimension of the problem, namely volatility. Millions of Americans are living within their means -- they spend less than they earn -- but can’t rely on mainstream financial services because their incomes and expenses are volatile. They struggle with cash-flow timing problems that require, today, use of high-cost products like payday loans, deposit overdrafts, and check-cashing. Millions spend hours each month driving around town to pay bills on the exact due dates, because cash gets credited without the lags that permeate our payments system. (See Lisa Servon’s book, The Unbanking of America, and also the important new paper by my Harvard colleague Todd Baker.)
Several years ago, these insights led CFSI to reframe its mission from focusing on financial inclusion and the “underbanked” to a strategy of building financial health. The good news is that today’s innovators are attacking every problem in this complex system. It’s becoming possible to equip everyone to lead a healthy financial life, regardless of their income or situation.
I now sit at the CFSI board table in the place once held by our founding chair (and former OTS Director) Ellen Seidman. I’m awed by the vision of Jennifer, Ellen, and the other founding directors and staff who saw how innovation could transform people’s financial lives, more than a decade before we even had the word “fintech.”
I hope you’ll get involved with CFSI. Please visit the website for a wealth of material, resources, networking opportunities and ideas, and also come next month to the Emerge Financial Health Forum in Austin. I’ll be there, along with hundreds of innovators in fintech, banking, finance, nonprofits, academia, and government, exploring new solutions.
Also coming up shortly, is a podcast with the great Brett King, another fellow CFSI board member. As a matter of fact, I’ll share my very fun appearance this week on Brett’s Breaking Banks Radio show.
Updates and Upcoming Events:
10th Annual Assessments Summit, June 29th, Arlington, VA
My podcast: Heroic Compliance with Lyn Farrell, Treliant
My podcast: Outspoken: Bill Harris, Chairman of Personal Capital, former CEO of PayPal and Intuit
- My podcast: Fiat Currency can be Virtual Too: Jonathan Dharmapalan, CEO or eCurrency
As always, check the website for more updates -- and keep innovating!